During a wave of new construction in Durham, the city erected the Durham Auditorium, to take the place of the demolished Academy of Music, as a performing hall for concerts and touring shows.

Its primary use, though, soon became movies and its common name became "Carolina Theatre," leased by the city to private operators until declining audience numbers led to its vacancy in 1977. A private nonprofit, the Carolina Cinema Corp., then took over the lease and operated the Carolina as an art- and foreign-film house that drew audiences from around the region.

In 1988, after the premiere local run of "Bull Durham", the Carolina Theater closed for several years' of renovation and restoration in conjunction with the remodeled Durham Arts Council Building and Durham Convention Center construction. After reopening, its operation passed to the new Carolina Cinema Corp., with motion pictures playing daily in two new cinemas and the original auditorium used for live performances.